Court of Appeal endorses ENRC on when criminal proceedings are in contemplation

The Criminal Court of Appeal considered a claim for litigation privilege over documents generated when matters were still at an investigatory stage, agreeing with the analysis in ENRC as to when a criminal prosecution can be said to be in reasonable contemplation.

Update

The Court of Appeal’s decision in SFO v ENRC has effectively overruled parts of this decision, making clear that litigation privilege can apply to communications and documents created during an investigation before any prosecution is commenced and before the company has discovered evidence sufficient to justify a prosecution. The Court noted that, unlike an individual who will know whether they have committed a crime, a company may need to find out what its employees have done before it can assess its culpability. For more analysis of this decision see our article here.

The key decision on legal privilege in Serious Fraud Office v Eurasian Natural Resources Corporation Ltd (ENRC) is pending appeal, to be heard in July 2018. In the meantime two other judgments have referred to it in quick succession. The first was Bilta v RBS, in which the High Court held that a letter from HMRC during a tax investigation marked a “watershed moment” from which litigation was reasonably in contemplation and litigation privilege therefore applied (see our article here). The Court of Appeal has now considered a claim to litigation privilege made in the context of a criminal investigation and has endorsed the views that Andrews J expressed in ENRC.

When does litigation privilege commence?

In R v Jukes, the Court of Appeal was faced with a claim to privilege by an employee convicted of breaches of health and safety legislation that had led to another employee’s death. The company and its CEO had pleaded guilty, but Mr Jukes denied that he had responsibility for health and safety at the premises. He was convicted, but appealed on grounds that evidence relied upon by the prosecution was inadmissible.

During the proceedings, a statement signed by Mr Jukes had emerged, in which he said that he had taken over formal responsibility for health and safety after another employee left. This statement had been given to the company’s solicitors as part of an investigation into the fatal incident. Mr Juke objected to its admission in evidence and claimed it was protected by litigation privilege.

In rejecting this assertion, the court noted that there was no evidence (from the company, its CEO or the applicant himself), that there were proceedings in contemplation at the time the statement was made. Mr Juke argued that as an employee had died and on the face of it there appeared to be a breach of duty, it was to be expected that the Health and Safety Executive would normally prosecute and therefore the test of proceedings being in reasonable contemplation was satisfied. However, the court held that this was insufficient in the context of a criminal prosecution.

The judgment expressly endorses the analysis of Andrews J in ENRC that a criminal investigation by a prosecutor is not sufficient to found a claim of litigation privilege. “An investigation is not adversarial litigation” and ”does not necessarily equate to the reasonable contemplation of a prosecution".

The court went on to note that even if privilege could have applied to the statement, any such privilege would have been the company’s, and not the employee’s, as the solicitors to whom it was produced acted for the company. The court commented that privilege “does not simply float in a vacuum” but must be asserted by the party to whom it belongs.

What this means

After Bilta appeared to suggest that litigation privilege might apply in investigations somewhat earlier than ENRC suggested, this decision provides higher authority for the proposition that litigation privilege can only be claimed in criminal proceedings once either:

a prosecution has formally been commenced, or

an investigation has uncovered evidence that caused it to consider a criminal prosecution to be “more likely than not”.

Given that a prosecution will only be brought when there is sufficient evidence to provide a realistic prospect of conviction, most companies will be wary of doing anything that appears to accept that a criminal prosecution, rather than just investigation, is more likely than not. While Bilta may allow for arguments as to when proceedings are in reasonable contemplation in regulatory and tax investigations, Jukes sets the bar very high for asserting litigation privilege in criminal proceedings.

It should be noted, however, that Jukes is a short ex tempore judgment, with little detailed analysis of ENRC or the surrounding principles or reasoning.

Notwithstanding these recent judgments, all eyes will be on the Court of Appeal in July 2018 in the hope that more workable parameters for litigation privilege can be established in investigations.

This document (and any information accessed through links in this document) is provided for information purposes only and does not constitute legal advice. Professional legal advice should be obtained before taking or refraining from any action as a result of the contents of this document.

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Reviewing the more interesting cases arising under the law of legal professional privilege.